Asia Summary and Highlights 20 December

Asia Session

On Friday, we started the day with some verbal intervention from Japan finance minister Kato. The jawboning came with nothing new but is enough to curb the latest rally in USD/JPY. Moreover, the Japan November National headline CPI came in stronger than prior month at +2.9%, ex fresh food and ex fresh food & energy also edged higher. While this should be very supportive for the JPY, the lack of commitment in the BoJ December statement limited its impact. USD/JPY is trading 0.2% lower at 157.1 with both the U.S. Treasury and JGB yields lower.

While regional sentiment is still holding on, U.S. three major equity indexes are all in the red and are dragging sentiment. With USD continue to exert its strength, major currencies except the JPY are suffering. AUD/USD is down 0.23% to 0.6224, NZD/USD also down 0.13% to 0.5623 while USD/CAD rose 0.19% as oil slips 30 cents. Else, EUR/USD is up 0.02% and GBP/USD is down 0.16%.

North American session

After being led higher by USD/JPY in Europe, GBP/USD led the USD higher in North America, dipping below 1.26 on the fact there were three dissenting votes against the BoE decision to leave rates unchanged, with losses eventually extending to near 1.25. EUR/USD fell to touch 1.0350 from around 1.04. USD/JPY reached as high as 157.80 but corrected back up 157.35. The AUD and CAD were quieter, sustaining most though not all  of their European gains.

US data showed initial claims falling to 220k from 242k, and Q3 GDP revised up to 3.1% from 2.8%. However, December’s Philly Fed manufacturing survey was weak, falling to -16.4 from -5.5. Later November existing home sales rose 4.8% to 4.15m. The UST curve steepened with Trump demanding that the debt ceiling be raised or eliminated as negotiations to avert a government shutdown continued.